Two days ago Feds conducted the new Taf auction with stop-out rate of 3.123% (thanks That Guy Drinks Beer). Today they conducted the unexpected add of $17 bln with stop-out rates between 3.05% and 3.17%, almost all agency and mortgage collateral.

People at capitalstool board see two things here:

  • Feds are preparing the market for some disappointment, adding money in front of announcement
  • Today rates are bouncing around 3.125%, pointing to 3/8% rate cut today

The usually boring Fed decisions are full of excitements nowadays!